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Legislation #: 170962 Introduction Date: 11/30/2017
Type: Ordinance Effective Date: none
Sponsor: COUNCILMEMBER TAYLOR
Title: Adopting the “Revive the East Side” initiative by establishing policies with respect to incentivizing redevelopment on the East Side of Kansas City, Missouri through the creation of the East Side Investment Zone and programs to be implemented therein, including the Reinvestment in Economic Growth Program; further amending certain provisions of Second Committee Substitute for Ordinance No. 160383, As Amended, and Committee Substitute for Ordinance No. 140031, As Amended, to implement such policies with regards to the contribution of certain tax revenues and the role of financial return analyses in analyzing such projects; directing the City Manager to take certain actions with respect to engaging the EDC for the purposes of formulating and proposing a development plan under the Urban Redevelopment Corporations Law for the purpose of remediating any blight determined to exist through the revitalization of housing within the East Side Investment Zone; directing the City Manager to identify a source of funding for a $10,000,000 home improvement and economic development fund; directing the City Manager to cause an umbrella neighborhood organization to be incorporated if found necessary; directing the City Manager to develop a plan for combating gentrification within a defined area; directing the City Manager to establish a pilot program in the East Side Investment Zone for the purpose of reducing illegal dumping; directing the City Manager to streamline the application process for projects in the East Side Investment Zone and to cause the City Planning Department to implement concierge services with respect to projects in the East Side Investment Zone; appropriating the sum of $3,000,000 for the purposes of funding the preservation or reconstruction of certain dangerous buildings; directing the City Manager to report back to the City Council on certain matters; directing the City Clerk to deliver a copy of this ordinance to the State Director of Economic Development; and providing for a ten-year sunset on the provisions of this ordinance.

Legislation History
DateMinutesDescription
11/30/2017 Filed by the Clerk's office
11/30/2017 Referred to Planning, Zoning & Economic Development Committee
12/6/2017 Hold On Agenda (3/7/2018)
3/7/2018 Hold On Agenda (4/18/2018)
4/18/2018 Hold On Agenda (5/23/2018)
5/23/2018 Hold On Agenda (8/1/2018)
8/1/2018 Hold On Agenda (8/15/2018)
8/15/2018 Hold On Agenda (9/12/2018)
9/12/2018 Hold On Agenda (9/26/2018)
9/26/2018 Hold On Agenda (10/10/2018)
10/10/2018 Do Pass as a Second Committee Substitute
10/11/2018 Assigned Third Read Calendar as Substituted
10/18/2018 Councilmember Taylor (Second by Lucas) Move to Amend
10/18/2018 Amended
10/18/2018 Held on Docket (11/1/2018)
11/1/2018 Held on Docket (11/15/2018)
11/15/2018 Councilmember Taylor (Second by McManus) Move to Amend
11/15/2018 Councilmember Taylor (Second by McManus) Move to Advance
11/15/2018 Passed Second Committee Substitute As Further Amended

View Attachments
FileTypeSizeDescription
170962.pdf Authenticated 413K authenticated Ordainance
Exhibit A.jpg Exhibit 6792K Exhibit A
2ndCS170962 (10.04.18 version)-Lucas.docx Other 37K Proposed Changes-Lucas
170962.pdf Other 50K Handout
170962-b.pdf Other 89K Presentation

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SECOND COMMITTEE SUBSTITUTE ORDINANCE NO. 170962, AS FURTHER AMENDED

 

Adopting the “Revive the East Side” initiative by establishing policies with respect to incentivizing redevelopment on the East Side of Kansas City, Missouri through the creation of the East Side Investment Zone and programs to be implemented therein, including the Reinvestment in Economic Growth Program; further amending certain provisions of Second Committee Substitute for Ordinance No. 160383, As Amended, and Committee Substitute for Ordinance No. 140031, As Amended, to implement such policies with regards to the contribution of certain tax revenues and the role of financial return analyses in analyzing such projects; directing the City Manager to take certain actions with respect to engaging the EDC for the purposes of formulating and proposing a development plan under the Urban Redevelopment Corporations Law for the purpose of remediating any blight determined to exist through the revitalization of housing within the East Side Investment Zone; directing the City Manager to identify a source of funding for a $10,000,000 home improvement and economic development fund; directing the City Manager to cause an umbrella neighborhood organization to be incorporated if found necessary; directing the City Manager to develop a plan for combating gentrification within a defined area; directing the City Manager to establish a pilot program in the East Side Investment Zone for the purpose of reducing illegal dumping; directing the City Manager to streamline the application process for projects in the East Side Investment Zone and to cause the City Planning Department to implement concierge services with respect to projects in the East Side Investment Zone; appropriating the sum of $3,000,000 for the purposes of funding the preservation or reconstruction of certain dangerous buildings; directing the City Manager to report back to the City Council on certain matters; directing the City Clerk to deliver a copy of this ordinance to the State Director of Economic Development; and providing for a ten-year sunset on the provisions of this ordinance.

 

WHEREAS, the City Council has, since the inception of AdvanceKC, consistently strived to adopt and implement cohesive economic development policies for the benefit of the entire community, and has evidenced its commitment to the same through the adoption of multiple ordinances; and

 

WHEREAS, development on the East Side of the City has been steadily increasing, but continues to suffer from years of disinvestment; and

 

WHEREAS, it is the sense of the City Council that the City as a whole will not fully realize its economic potential until all areas of the City begin to realize the benefits that economic development brings, particularly to the communities most directly impacted; and

 

WHEREAS, the ten “Categories of Competitiveness” in the AdvanceKC Strategic Plan adopted by the City Council are interrelated and, at their core, are indicative of a City that is committed to investing in its workforce, residents and business communities; and

 

WHEREAS, the City Council believes that it is a proper function of municipal government to create a climate where a business is incentivized to hire disadvantaged persons, which in turn improves the economic mobility of the City’s residents and decreases the public expenses associated with continued unemployment; and

 

WHEREAS, the City Council further believes that it is a proper function of municipal government to foster business growth and to create opportunities to attract, retain and expand businesses to and within the City; and

 

WHEREAS, the City Council recognizes that a vibrant economy is dependent, in large part, on the remediation of blighting influences in our neighborhoods, including through the preservation or reconstruction of dangerous buildings and the reduction of illegal dumping, and in fostering the ability of our workforce to secure safe housing so that they are not driven to leave the City, but are able to remain and continue to contribute to the City’s economic growth; and

 

WHEREAS, the City Council further recognizes that the maintenance of the City’s existing housing stock is critical, not only because of the need for safe housing, but because properties which are allowed to fall into or remain in a state of disrepair drive down property values, increase crime, and ultimately decrease the economic prosperity of entire neighborhoods; and

 

WHEREAS, the City Council believes that economic development is measured not just by physical infrastructure, but by intangible improvements that improve quality of life and encourage more people to visit and ultimately invest in the East Side of the City; and

 

WHEREAS, the City Council has determined that the programs and policies enacted by this ordinance serve a predominantly public municipal purpose because, without limitation, they will (i) eliminate blight which may be conducive to crime, fire hazards, vandalism and other safety concerns; (ii) enhance the tax base; (iii) generates jobs; (iv) promote economic development in areas of the City that otherwise might not have been considered; (v) foster generation of tax revenues to the City from the conduct of business and other activities in the City that would not otherwise occur; (vi) serve as a catalyst for additional investment in and further redevelopment and rehabilitation of the East Side; (vii) further the City's policy of encouraging economic stability and growth; and (viii) provide safe and affordable housing; and

 

WHEREAS, the City Council desires to encourage developers, employers, employees and residents to help the City realize these predominantly public purposes; and

 

WHEREAS, the City Council deems it advisable that the provisions of this ordinance sunset in a ten-year period so that the City Council can gauge the effectiveness of these policies in incentivizing economic development within the East Side, and determine whether the same should be extended or revised in any fashion; NOW, THEREFORE,

 

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

Section 1. That this ordinance and the programs enacted herein shall be referred to as the “Revive the East Side” initiative.

 

Section 2. That there is hereby established an area to be denominated the “East Side Investment Zone” which shall be defined as including those areas within the geographical boundaries as depicted on Exhibit A to this ordinance, as attached hereto and incorporated herein, that are severely and/or continuously distressed census tracts or located south of 87th Street.

 

Section 3. That, except as otherwise provided for herein, any proposed economic development projected located within the boundaries of the East Side Investment Zone and receiving a total job-based score categorized as “Standard Impact” or “High Impact” under the Job Based Project Evaluation as adopted by Committee Substitute for Ordinance No. 160683, as the same may be amended, shall not be subjected to a financial return analysis pursuant to Section 2, Paragraph B, of Second Committee Substitute for Ordinance No. 160383, As Amended, nor shall the EDC require such an analysis as a condition of any AdvanceKC related process or procedure. Notwithstanding the foregoing, the EDC may elect to require and prepare an in-house financial return analyses for any proposed economic development project if the EDC has cause to believe that one or more of the incentives authorized by this ordinance should not be extended, or that the extension of the same might cause the proposed development project to be incentivized in excess of an appropriate market benchmark.

 

Section 4. That the “Reinvestment in Economic Growth Program” (the “Reinvestment Program”) is hereby established for the purposes of allowing certain public funds generated within the East Side Investment Zone to be reinvested therein for the primary public purpose of incentivizing economic development.

 

A.                For purposes of the Reinvestment Program only, the following definitions shall be applicable:

 

Allocable Earnings Tax shall mean, with respect to a given fiscal year (May 1 through April 30), an amount equal to not less than fifty percent (50%) nor more than one hundred percent (100%) of the incremental increase in the Earnings Tax over the fiscal year having expired immediately prior to the effective date of the applicable Reinvestment in Economic Growth Agreement which is due for work done or services performed or rendered for an Employer within the East Side Investment Zone by those employees whose wages, or portions thereof, the Employer has been approved by the Missouri Department of Economic Development to claim as a federal tax credit under the federal Work Opportunity Tax Credit (“WOTC”) program, or who were hired through the services of the Full Employment Council, Inc., in its capacity as the strategic workforce organization/fiscal agent for the Kansas City & Vicinity (“KCV”) and Eastern Jackson County (“EJC”) Local Workforce Development Boards, or who is currently attending or has graduated from a public high school located in the East Side Investment Zone or in lieu thereof has successfully obtained high school equivalency credentials through General Educational Development (“GED”) or High School Equivalency Test (“HiSET”) testing, or who is currently attending or has graduated from Metropolitan Community College (“MCC”) with an associate’s degree or technical certificate, or who is currently attending or has completed an educational certificate program.

 

Allocable Electrical Utility License Fees shall mean, with respect to a given fiscal year (May 1 through April 30), an amount equal to not less than fifty percent (50%) nor more than one hundred percent (100%) of the incremental increase in the Electrical Utility License Fees over that which was recouped by the electrical utility provider from an Energy-Intensive Business in the form of a franchise or city license fee with respect to a facility located within the East Side Investment Zone during the fiscal year having expired immediately prior to the effective date of the applicable Reinvestment in Economic Growth Agreement.

 

Earnings Tax shall mean the City’s tax on earnings levied pursuant to Section 68-382 of the Kansas City, Missouri Code of Ordinances, as the same may be amended, or any successor thereto.

 

East Side Investment Zone shall include that area as defined in Section 2 of this ordinance.

 

Electrical Utility License Fees shall mean the City’s license fees and emergency license taxes on the gross receipts of electrical utility providers levied pursuant to Sections 40-344 and 40-345 of the Kansas City, Missouri Code of Ordinances, as the same may be amended, or any successors thereto.

 

Employer shall be an individual, corporation (including a corporation not for profit), partnership, governmental administration agency, arm, authority, board, body, branch, bureau, department, division, subdivision, section or unit, or any other entity, who or that employs one or more persons on a salary, wage, commission or other compensation basis within the East Side Investment Zone.

 

Energy-Intensive Business means a business within the East Side Investment Zone that uses significant quantities of electrical energy in the performance of its primary economic activities, which shall include information technology, including data centers containing electrical equipment used in processing, storing, and transmitting digital information; and the bulk manufacturing of aluminum, chemicals, forest and paper products, metal casting, glass, petroleum refining, mining and steel.

 

Reinvestment in Economic Growth Agreement shall mean a written agreement between the City and an Employer or Energy-Intensive Business with respect to the reinvestment of certain Allocable Earnings Tax and Allocable Electrical Utility License Fees, individually or collectively, for the purpose of promoting economic development within the East Side Investment Zone.

 

B.              For purposes of the Reinvestment Program only, the following provisions shall be applicable:

 

1.                Except as otherwise provided for herein, an Energy-Intensive Business or Employer proposing to expand its operations within the East Side Investment Zone and engaged with the EDC for the purposes of identifying those incentives which might be available shall be eligible for consideration as a participant under this Reinvestment Program as the same is applicable to their respective operations. The EDC shall make its written recommendation to the City Manager with respect to such participants and the portion of the Allocable Electrical Utility License Fees and/or Allocable Earnings Tax that it recommends be committed, and the City Manager shall thereafter be authorized to execute such Reinvestment in Economic Growth Agreement as he shall determine to be in the City’s best interest.

 

2.                Notwithstanding the provisions of paragraph B.1, the following exceptions shall be applicable:

 

i.                 No Employer or Energy-Intensive Business electing to compensate any employee at a rate less that Fifteen dollars ($15.00) per hour, exclusive of benefits, shall be eligible to receive any incentive under this Reinvestment Program.

 

ii.               No Employer or Energy-Intensive Business shall be eligible to receive any incentive under this Reinvestment Program if they are otherwise deemed ineligible for incentives under the provisions of Committee Substitute for Ordinance No. 140031, As Amended, as the same may be further amended, or any successor thereto.

 

iii.             No business located within the geographical boundaries of Kansas City, Missouri as of the effective date of this ordinance and subsequently relocating to the East Side Investment Zone shall be eligible to receive any incentive under this Reinvestment Program unless the City Manager shall have designated the Employer or Energy-Intensive Business as being the subject of an effort to retain the same.

  

 

Section 5. That the City Manager shall identify funding sufficient to fund or update existing blight studies with respect to those geographical corridors within the East Side Investment Zone that might be deemed a blighted area under the provisions of the Urban Redevelopment Corporations Law (“Chapter 353”) and to engage the EDC for the purposes of utilizing an existing urban redevelopment corporation, or establishing a new urban redevelopment corporation if the same be deemed advisable, for the purpose of formulating and proposing a development plan that would provide such property tax abatements as are determined to be advisable pursuant to Chapter 353 and Second Committee Substitute for Ordinance No. 160383, As Amended, as the same may be further amended, or any successors thereto, with the primary objective being the remediation of blight through the revitalization of housing in the collective area.

 

Section 6. That the City Manager shall identify funding in the amount of $10,000,000.00, in addition to those existing city-wide and targeted home improvement funds received and administered by the City in cooperation with the U.S. Department of Housing and Urban Development, for the purpose of improving and creating residential properties, including further opportunities for home ownership within the East Side Investment Zone and for the purpose of creating and supporting job-creating economic development opportunities within the East Side Investment Zone. The funds shall be used in coordination with existing efforts of any of the following: (1) the Central City Economic Development Sales Tax Board; (2) the Neighborhood Advisory Committee for the Heart of the City Neighborhood Stabilization TIF Plan; (3) the Department of Neighborhoods and Housing Services; or (4) the Kansas City, Missouri Office of Economic Development. The City Manager shall report back to the City Council within 30 days of the adoption of this ordinance, and shall recommend any eligibility criteria which he deems advisable.

 

Section 7. That the City Manager shall work with and create, as necessary, a nonprofit neighborhood-based development organization for the purposes of coordinating efforts among those neighborhood organizations within the East Side Investment Zone as may elect to participate with respect to coordinating neighborhood improvement and revitalization efforts. The City Manager shall identify funds sufficient to fund such organization and shall engage the EDC for the purposes of providing staffing assistance to such corporation, if feasible.

 

Section 8. That the City Manager shall develop a plan for combating gentrification within the East Side Investment Zone and shall engage Jackson County and such other taxing jurisdictions as may be appropriate for the purposes of formulating a mechanism for freezing real property tax liabilities for long time homeowners, senior citizens and homes that have been held within the same family for multiple generations and whose assessed values are increasing at a rate which exceeds the average growth for residential property within the East Side Investment Zone. The City Manager shall report back to the City Council within 30 days of the adoption of this ordinance with respect to any options that have been identified.

 

Section 9. That the City Manager shall develop a pilot program, applicable within the East Side Investment Zone, for the purposes of reducing the instances of illegal dumping. Such program shall provide for the curbside collection of bulky items not less than once per month, on a fixed schedule and without the necessity of scheduling an appointment, and shall include additional trash amnesty days. Such pilot program shall be implemented not later than the next renewal date of the citywide trash collection commencing after this ordinance shall have become effective.

  

Section 10. That the City Manager shall engage the EDC and relevant City departments for the purpose of streamlining the application process for projects in the East Side Investment Zone. The City Manager shall report back to the City Council within 30 days of the adoption of this ordinance.

 

Section 11. That the City Manager shall cause the City’s Planning Department to implement concierge services to assist individuals and small businesses in establishing new projects in the East Side Investment Zone. The City Manager shall report back to the City Council within 30 days of the adoption of this ordinance.

 

Section 12. That Committee Substitute for Ordinance No. 140031, As Amended, is hereby further amended by deleting Section C, Fiscal Responsibility Policies, Paragraph No. 9, of Exhibit A as attached thereto, and inserting in lieu thereof the following:

 

9. Direct earnings tax incentives are prohibited except as otherwise authorized pursuant to ordinance adopted by the City Council.

 

Section 13. That Second Committee Substitute for Ordinance No. 160383, As Amended, is hereby further amended by deleting Section 2 and inserting in lieu thereof the following:

 

Section 2. That the EDC shall make recommendations on economic development projects to the City Council for the capture and redirection, or abatement or exemption of real property taxes on the basis of the following, except as otherwise authorized pursuant to ordinance adopted by the City Council:

 

A.    The EDC shall have evaluated the project using the AdvanceKC Scorecard for the purposes of determining the extent to which the project aligns with the City Council’s priorities as set forth therein.

 

B.     The EDC shall have prepared, or caused a third party to prepare, a financial return analysis for the purposes of comparing the leveraged and unleveraged internal rate of return to determine whether and to what extent the project warrants public assistance consistent with incentivizing the project to an appropriate market benchmark. That analysis shall specifically include a review of the project’s economic viability were the real property tax incentives limited to that which is provided herein.

 

Section 14. That nothing herein shall be construed as limiting or otherwise waiving any requirements imposed under any applicable provision of federal or state law, as the same may be amended from time to time.

 

Section 15. That the City Manager shall identify a source of funding in the amount of $3,000,000.00 to be utilized for the preservation or reconstruction of residential structures on the City’s dangerous building list and located in the East Side Investment Zone, and shall include funds for the foregoing in the annual budgets commencing in Fiscal Year 2019-20 until the full amount shall have been appropriated. Furthermore, the City Manager shall identify a source of funds for covering any gap in financing the preservation or reconstruction of such residential structures, and shall report back to the City Council within 30 days of the adoption of this ordinance.  

 

Section 16. That notwithstanding any provision of this ordinance to the contrary, no individual or business entity located in the East Side Investment Zone and having received or directly benefitting from the capture and redirection, or abatement or exemption of taxes, within the ten (10) year period immediately preceding the effective date of this ordinance shall be eligible for any incentives hereunder.

 

Section 17. That the City Clerk is hereby directed to deliver a copy of this ordinance to the State Director of Economic Development within thirty days following passage of this ordinance.

 

Section 18. That the provisions of this ordinance shall expire ten (10) years from the date the ordinance shall have become effective.

 

__________________________________________________

 


 

I hereby certify that there is a balance, otherwise unencumbered, to the credit of the appropriation to which the foregoing expenditure is to be charged, and a cash balance, otherwise unencumbered, in the treasury, to the credit of the fund from which payment is to be made, each sufficient to meet the obligation hereby incurred.

 

 

_______________________________

Randall J. Landes

Director of Finance

 

Approved as to form and legality:

 

 

___________________________

Brian T. Rabineau

Assistant City Attorney